For many people, looking into home loans is a key step in the homebuying process. Because a house is likely the biggest purchase of your life, you should consider the best mortgage lenders. Top mortgage lenders not only save you money but also help make homebuying less stressful. This guide can assist you when you are ready to apply for a mortgage loan.
U.S. News selects the Best Loan Companies by evaluating affordability, borrower eligibility criteria and customer service. Those with the highest overall scores are considered the best lenders.
To calculate each score, we use data about the lender and its loan offerings, giving greater weight to factors that matter most to borrowers. For mortgage lenders, we take into account each company’s customer service ratings, interest rates, loan product availability, minimum down payment, minimum FICO score and online features.
The weight each scoring factor receives is based on a nationwide survey on what borrowers look for in a lender.
To receive a rating, lenders must offer qualifying loans nationwide and have a good reputation within the industry. Read more about our methodology.
Axos Bank, founded in 2000, is a digital financial services company based in San Diego. The full-service online bank offers everything from personal and business savings and checking accounts to auto and home loans.
Borrowers with an Axos Bank checking account can reduce or eliminate the lender fee and earn cash back by using the account to make monthly mortgage payments.
AmeriSave Mortgage Corp. is an online lender that has been in business since 2002. It was one of the first to offer an offsite, digital mortgage experience for customers. The company says it has financed more than 390,000 homes since it began operating. With headquarters in Atlanta, AmeriSave services loans in 49 states and Washington, D.C.
Caliber Home Loans of Coppell, Texas, offers mortgage products nationwide. Options include conventional, adjustable-rate, jumbo, refinancing, Federal Housing Administration, U.S. Department of Agriculture and Department of Veterans Affairs loans.
Caliber has been in business since 2008, and is solely focused on home lending products.
Carrington Mortgage Services, founded in 2007, offers an array of mortgage and refinancing options to borrowers seeking conventional or government-backed loans. Its California-based parent company, Carrington Holding Co., was established in 2003 and provides a range of real estate services. Carrington Mortgage Services is based in California and also has offices in Arizona, Connecticut, Florida, Indiana and Maryland.
Veterans United Home Loans offers mortgages in all 50 states and Washington, D.C., and specializes in Department of Veterans Affairs loans. Since 2016, Veterans United Home Loans has generated the largest number of VA purchase loans per year in the nation. The lender was founded in 2002 and is based in Columbia, Missouri.
Locking in a low mortgage rate today can save you thousands over the life of your loan. Compare your mortgage rate offers with national average trends.
A mortgage is a loan from a bank or other lender used to buy or refinance a home.
Mortgages are secured loans: The property acts as collateral as you repay the loan in monthly installments, including interest, often over 15 to 30 years. If you fail to pay, the lender can foreclose on your home.
Once you reach the milestone of paying off your mortgage, you can contact your local secretary of state or county recorder of deeds to verify that the lien on your property has been released. Your mortgage lender should also return your original promissory note.
U.S. News Survey
U.S. News Survey: Despite Rising Interest Rates, Low Inventory and High Prices, 70% of Homebuyers Are Optimistic About Their Prospects
A U.S. News survey in March found that people who are planning to buy a home or refinance their mortgage in the next year are feeling good about their chances. While acknowledging that interest rates are already rising from historic lows and housing inventory remains tight, 70.3% of respondents say they feel generally optimistic about their homebuying or refinancing prospects. Though hopeful, nearly as many respondents, 69.9%, say they regret not starting their homebuying or refinancing process earlier.
When respondents evaluate home affordability or availability, 50.3% say affordability is the bigger concern in today’s housing market. About half as many – 26.8% of respondents – say availability is the bigger issue, while another 22.9% of respondents say the problems are completely intertwined.
Additional Survey Insights
Most respondents are first-time homebuyers: 48.3% of people are shopping to buy their first homes, while 18.9% of people are selling their current homes and buying a new one. Another 22.4% of people are refinancing their existing mortgages.
For respondents who are refinancing, 41.6% are doing it to lower their monthly payments.
Two-thirds of respondents (65.9%) are getting a mortgage that’s $400,000 or less.
There isn’t a clear preferred way that respondents are picking their mortgage lender. While 20.8% of respondents are sticking with their current lender or bank, 30.5% are searching online to find a new lender. A full 11.2% of respondents say they don’t know how they are going to pick.
The conventional, 30-year fixed-rate mortgage is the most popular mortgage type, with 33.8% of respondents saying they plan to get it. The conventional, 15-year fixed-rate mortgage has a strong second-place showing with 30.3% of respondents saying they prefer that option.
Respondents say that to improve their local housing situation, the best things the government could do would be to give first-time homebuyers a tax credit (42.3%) and stop investors from buying homes (37.3%). Only 19.3% of respondents say the government shouldn’t be doing anything.
U.S. News Survey Methodology
- U.S. News ran a nationwide survey of 1,200 respondents through PureSpectrum on March 4, 2022. Only people who are planning to buy a home or refinance their mortgage in the next year answered questions.
- The survey sample drew from the general American population, and the survey was configured to be representative of this sample.
- The survey asked nine questions relating to homebuying and home financing.
The mortgage process looks different depending on whether you are purchasing or refinancing a home. Here are some of the basic steps involved in buying a house:
- Submit your mortgage application. Most lenders offer an online mortgage application process for home loans. You will complete a full application and provide documentation to the lender. You might also be able to get preapproved for a mortgage before officially applying.
- Review your loan estimate. You will get a loan estimate within three business days of the lender receiving your application. This document will include your estimated interest rate, monthly payment and closing costs.
- Schedule a home inspection. You’ll want the inspection done as soon as possible to leave enough time to negotiate with the seller if the inspection reveals any problems.
- Pay for a home appraisal. Your lender orders the appraisal, but you’ll typically have to pay for it.
- Purchase homeowners insurance. This insurance is required before your loan can be approved.
- Budget time for mortgage processing and underwriting. Mortgage processing prepares your loan for underwriting. Then an automated underwriting system typically reviews mortgage applications, with manual underwriters intervening if the system finds a red flag. Underwriting can take anywhere from a couple of days to more than a week.
- Review the closing disclosure. By law, you must receive this document at least three business days before you sign the mortgage documents. Be sure to compare the disclosure with the most recent home loan estimate from your lender so you don’t miss any big changes.
- Close the loan. This is when you and all the parties in the mortgage transaction sign the necessary documents. You will typically pay your down payment and closing costs.
Your mortgage interest rate is the annual cost of your loan amount, expressed as a percentage of the total loan amount. It does not include fees and other costs. A 5% interest rate on a mortgage means you will pay 5% of your loan’s balance in interest each year. Your mortgage also has an annual percentage rate that reflects your interest rate plus other charges, such as most closing costs, discount points and origination fees.
Mortgage interest rates can be fixed or adjustable.
Fixed rate: A fixed-rate mortgage keeps the same interest rate throughout the entire loan term, and your monthly mortgage payment stays the same. You don’t have to worry about costs going up, but you can’t benefit if market rates fall unless you refinance.
The monthly payments on a fixed-rate mortgage are typically higher than the initial monthly payments on an adjustable-rate mortgage because the lender can’t increase your interest rate later.
Adjustable rate: The interest rate on adjustable-rate mortgages can change over time. After an initial period during which your rate is set, your monthly payments can rise or fall based on market rates. Adjustable-rate mortgage interest rates depend on a benchmark rate, such as the prime rate.
When benchmark rates go up or down, so does your interest rate – and your mortgage payment. Adjustable-rate mortgages can make sense when you plan to sell or refinance your home before the rate increases, or if you expect market rates to decrease.
Whether a fixed-rate mortgage or an adjustable-rate mortgage is best can depend on market conditions, your finances and how long you plan to keep your mortgage.
The right mortgage for you will depend on your finances, plans and preferences. Here are common types of mortgages:
Nonconforming loans. These include jumbo loans, which don’t meet Fannie Mae and Freddie Mac’s criteria for purchase. Jumbo loans exceed conforming loan limits and have stricter qualification standards because of the risk to lenders.
Conventional mortgages. These mortgages are not guaranteed by the federal government and are funded by private lenders. Conforming and nonconforming loans are both types of conventional loans. You may need a minimum credit score of 620, a maximum debt-to-income ratio of 43% and a down payment of at least 3% to qualify for a conventional loan. However, you will generally need to buy private mortgage insurance anytime your down payment is less than 20%.
Government-backed loans. These include Federal Housing Administration, Department of Veterans Affairs and U.S. Department of Agriculture loans, which are less risky for lenders because the government agency insures the loan. You may have more success getting a government-backed loan if you can’t qualify for a conventional loan.
Most lenders require a minimum credit score of 580 and a 3.5% down payment for an FHA loan, but you could qualify with a credit score between 500 and 579 and a 10% down payment .
The VA allows you to buy a home with no money down and sets no minimum credit score but requires a lender to review your full financial profile. You will need a Certificate of Eligibility, or COE, to show your lender that you qualify for the VA loan based on your service.
Most lenders require a credit score of 640 with no money down for USDA loans. You will need to meet income requirements and buy a home in eligible rural areas.
Fixed-rate mortgages. Interest rates and payments do not fluctuate with fixed-rate mortgages, which provides stability for budgeting. But if interest rates fall, you will have to refinance to take advantage of savings. Fixed-rate mortgages can be conventional or government-backed loans.
Adjustable-rate mortgages. These loans have interest rates and monthly payments that can rise and fall during the course of the loan. An adjustable-rate mortgage has lower rates and payments early in the term compared with a fixed-rate mortgage, but rates can dramatically increase over the life of the loan. Conventional mortgages, VA loans and FHA loans can have adjustable rates.
Balloon mortgages. These home loans feature lower monthly payments paired with a larger lump-sum payment during the loan term. The lower monthly payment compared with a traditional mortgage may appeal to a buyer who plans to sell or refinance before the balloon payment is due.
The right mortgage term for you will depend on your financial goals and circumstances. Short-term mortgages will save on interest and build equity faster, but long-term mortgages are more affordable month to month. Along with the length of your mortgage, you will need to select a fixed or adjustable rate.
Here is more about common mortgage terms to help you pick the best one:
30-year fixed-rate mortgage. This tends to be the most popular choice because monthly payments stay low over the loan’s life span.
15-year fixed-rate mortgage. This loan has a higher monthly payment but greater overall interest savings compared with its 30-year cousin because you pay it off in half the time.
5/1 or 5/6 adjustable-rate mortgage. Your initial rate is fixed for five years, and then the rate adjusts once a year or every six months until the loan is paid off. If you won’t be staying in a home long, this could be a good choice.
10/1 or 10/6 adjustable-rate mortgage. Your initial rate is fixed for 10 years, and then the rate adjusts once a year or every six months for the remainder of your loan term. If you plan to sell or refinance before the 10-year fixed period ends, this mortgage might work for you.
- Having to pay a down payment, closing costs and other upfront expenses.
- Budgeting for property taxes, homeowners association fees and repairs.
- Putting in time and effort for upkeep.
- Having less flexibility if you want to move for a job or to care for a loved one.
Mortgage lenders want to know the risk of lending you money. A lender will look at not only your credit score but also your income, down payment and other key factors when reviewing your application.
Credit score: Your credit score is a major factor, but the minimum credit score can vary by lender and loan program. A conventional loan typically requires a minimum FICO score of 620, but some programs allow you to qualify with a lower credit score. You may be able to qualify with a lower score if the lender uses manual underwriting for your application.
Home price and loan amount: The larger your mortgage, the greater the risk for the lender. Lenders limit risk by following government loan limits. If you want to buy a property that costs more than these limits, you can apply for a jumbo loan.
Down payment: Your down payment is the amount you pay upfront for the property, while the mortgage covers the rest. A larger down payment can lead to a lower interest rate on your mortgage. You’ll be borrowing less money, and your lender is taking on less risk.
Loan term: The term is how long you have to repay the loan. The longer the term, the lower your monthly payments. A longer term typically has a higher interest rate and higher total costs compared with a shorter loan term.
Loan type: Government-backed loans typically charge lower rates than conventional loans. But FHA loans can be more expensive once you factor in other fees, such as mortgage insurance.
Before you begin to browse homes, you should start the mortgage preapproval process. Some sellers only work with preapproved buyers, plus preapproval allows you to make an offer as soon as you find a place you love.
If you are ready to apply for a mortgage, take these steps:
1. Check and improve your credit. Review your credit history and fix problems with your credit report before you apply for a mortgage by contacting each of the three credit bureaus separately to dispute errors.
2. Gather paperwork. For your loan application, you will likely need documents such as pay stubs, tax returns and bank account statements.
3. Apply with a few lenders to allow for comparison shopping. Your credit score will not suffer as long as you contain this process to 45 days.
4. Compare offers. Each lender will provide you with a loan estimate showing your interest rate, monthly payment and other key details, such as closing costs.
5. Choose a mortgage lender. Select the best option after you have evaluated the features of each home loan lender.
6. Respond promptly to requests during loan processing and underwriting. Expect questions and document requests.
7. Clear to close. The lender must send you the closing disclosure, which will show your final mortgage costs, at least three business days before your scheduled closing date. Compare the closing disclosure with your most recent loan estimate to check whether any fees have changed and, if so, why.
8. Close. Plan to pay your down payment and closing costs, which range from 2% to 5% of the purchase price. You will sign a heap of documents to complete your purchase. Congratulations!
You can evaluate mortgage companies based on four key factors:
- Interest rates. Interest can vary by lender and by product, so when you shop around and compare mortgage rates, you could find a better deal.
- Closing costs. When you factor in closing costs, which can include application, appraisal and loan origination fees, the lender with the lowest rate may not offer the best overall mortgage costs. Compare costs between lenders using the APRs.
- Product offerings. Look for a mortgage lender in your state with options that work for you, whether that’s a 30-year fixed-rate loan, a VA loan or something else.
- Customer service reviews. Use customer service feedback to research lender performance. Lenders should not only offer great loan rates but also treat customers well.
If you are in a tough financial position and can’t make your mortgage payments, move quickly to protect your home. Whatever the reason you’re struggling to make payments, reach out to your mortgage servicer right away to discuss your options.
- Buy a house in cash. Though, most buyers need to finance their home purchase.
- Ask for a loan from a family member. Make sure the terms of the loan are clear and in writing. Keep in mind that borrowing money from a loved one can strain your relationship.
- Look into seller financing. The seller acts as the lender in this type of real estate agreement. Seller financing could mean lower closing costs and flexible terms. On the other hand, it offers fewer buyer protections and potentially charges higher interest rates compared with traditional methods.
- Rent to own. You will be able to buy the home after a few years of renting it. This can work in a couple of ways. A portion of the monthly rent would go toward credit for buying the home at the end of the lease, or it may go toward the down payment. The risks are that you will lose your money if you decide not to buy the home and you must be ready to qualify for a loan to purchase the home at the end of the lease.
- Hold off on buying a home. Wait a few years until you have more in your savings account. Although a 20% down payment is the rule of thumb, you can still qualify with smaller amounts. If you’re young, you will also have a chance to build more credit history and figure out where you want to live.
Founded in 1990, Freedom Mortgage is one of the country’s largest loan originators and services, operating in all 50 states plus the District of Columbia, the U.S. Virgin Islands and Puerto Rico. Based in Mount Laurel, New Jersey, Freedom Mortgage was named No. 1 Veterans Affairs lender and No. 1 Federal Housing Administration lender by the industry publication Inside Mortgage Finance.
Freedom Mortgage offers a range of mortgage loans, including conventional, adjustable-rate, refinance, FHA, VA and U.S. Department of Agriculture. But what Freedom Mortgage is known for is its mission to help American military personnel purchase a home.
LoanDepot is a mortgage lender that operates nationally with more than 200 branches and delivers both a digital experience and face-to-face service. The lender offers fixed- and adjustable-rate conventional mortgages, Federal Housing Administration and Department of Veterans Affairs loans, as well as refinance and renovation loans. The company was founded in 2010 and is based in Foothill Ranch, California.
Pentagon Federal Credit Union, widely known as PenFed, offers borrowers access to many types of mortgages: conventional, adjustable rate, jumbo and Department of Veterans Affairs, plus refinancing loans and home equity lines of credit. The financial institution, which serves 2.5 million members, was established in 1935 and is based in McLean, Virginia.
Flagstar offers banking and loan products to borrowers in all 50 states. Borrowers can obtain mortgage and home equity products including conventional loans, Federal Housing Administration loans, Veterans Affairs loans, U.S. Department of Agriculture loans, adjustable-rate mortgages, and home equity loans and lines of credit.
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